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Elke U. Weber

Elke U. Weber

Jerome A. Chazen Professor of International Business, Director, Center for Research On Environmental Decisions, Director, Center for the Decision Sciences, Columbia Business School, Columbia University, New York, USA.

People dislike change. Like it or not, individual and collective histories have showcased human aversion, and in some cases, inability, to change course and learn from our mistakes. Why do we keep on smoking cigarettes or burn fossil fuels in the face of abundant evidence about the negative consequences? The irrationality behind these examples and others forms the inspirational core of Elke Weber's work, whose contributions lie at a crossroads between psychology and economics, shedding new light on behavioral models of judgment and decision-making under risk and uncertainty. Her uniquely diverse academic career has led her to assume multiple leadership roles at Columbia University, on editorial boards of numerous journals across disciplines, and on advisory committees of national and international organizations related to the human dimensions of global change. With numerous awards to her name for her research on how basic psychological processes like attention, emotion, and memory influence perceptions of risk, preference, and choice, Elke Weber will present some of her breakthroughs in Behavioral Decision Theory, with the intention of breaking the wall inherent to our aversion to change and linking it to technical and social innovation.

Breaking the Wall of Resistance to Change. How Behavioral Decision Theory Enhances Technical and Social Innovation.

Transcription

I am delighted and very honoured to talk to you today about how to break down the walls of resistance to change. Much of this work was done jointly with my colleague Eric Johnson, who is in the audience. Before I get started I want to ask you to do a little experiment for me. I want you all to get up. Now, I am not actually going to ask you to do this, but I am going to ask you to consider my request for you to change your seat – to move somewhere else in the room. Just monitor, for a few seconds, what goes through your mind, as you think about: will I move, or will I stay? .... Now that you have reflected on this, please sit down again.

What I am going to talk about for the next 14 minutes is inertia or status quo bias. If you come up with a technological or social innovation, are people going to adopt it? The answer, unfortunately, more often than not is “no”. It also happens at the personal level. We all know that we should exercise more, that we should eat less and we should reduce our carbon footprint, but it is very hard to do. It is hard to do for multiple reasons: change is hard, the costs come up front, the benefits are down the road and somewhat probabilistic. Change is scary; it involves uncertainty and risk, and we are risk averse. Also change requires self-control; we have to overcome our aversion to paying the immediate costs.

What determines how much self-control we exert? Is it a function of our personal characteristic, or is it a function of the situation in which we find ourselves? Well, as in most situations, it is a bit of both. So, let us start with the personal characteristics. There are, indeed, strong individual differences in self-control. There is a beautiful study that the psychologist Walter Mischel conducted at Stanford in the 1970s. He brought in five-year-old children, and put a small plate with a cookie, a single cookie, in front of them. He told each child: “You can have that cookie anytime you want. But if you are willing to wait for a few minutes until I come back, you can have twocookies.” Some of these kids managed to wait. Some of them succumbed to the temptation of the immediate cookie. 30 years later, those children who actually managed to wait were much more successful in schools and their careers, they made more money, and they had happier marriages.

There is a brain area that is involved in self-control. It is the area right underneath your temples: the dorsolateral prefrontal cortex. When we – we have done this in our lab –disrupt functioning of this area, people become much more impatient. It is a good reason to wear helmets when you go bicycling; you want to protect that area. It turns out that the level of activity in the dorsolateral prefrontal cortex, and also the connection of this area with other parts of the brain is partly genetic; therefore, some of us are better at self-control than others, and there is very little we can do about that.

Fortunately, situational characteristics, the power of the situation, also strongly influenced how forward-looking we are. That is something that we can influence, that we can change, the same way an architect would change the outlay of a building to facilitate different types of behaviour. So, we talk about decision architecture – how to construct the situation so that we, all of us, can be more foresightful and less impulsive in our choices.

Let me tell you for a second about Query Theory as a “blueprint” for such decision architecture. This is a theory that Eric Johnson and I developed in our lab. It describes at a process level, how people decide between different courses of action. When you were asked to make the decision between staying in your seat or moving somewhere else, what went on in your mind? We have shown that such decisions involve a process of arguing with yourself. You ask yourself: what is good about staying? What is good about moving? Depending on which of these queries provides you with more evidence, staying or moving, you choose accordingly. You choose on the basis of the evidence you generated. This is not necessarily, or most often the time, a deliberate process. It is something that happens naturally and automatically in your brain. It is quite important to note that these queries are issued sequentially, because the order in which we think about option A: “staying,” or option B: “moving,” matters a lot. It matters a lot, because the first query generates far more evidence than later queries. This has something to do with output interference. When you think about “what is good about staying?,” there might be the occasional reason that comes up for moving, but you are saying: “it is not quite your turn yet,” you suppress them. When you then move to consider the other choice option: “moving,” those reasons are still under the carpet; they have a harder time coming up – output interference.

So, obviously, this suggests that it is a really, really, important question to know which option gets considered first. One answer, one important answer, to that question is: the status quo gets considered first. This makes eminent sense when the status quo is something that you have been doing for a while or when you have good reason for it, like you choosing your seat. There might have been a sign with your name on your chair that said “sit here”, or you had a neighbour that you wanted to talk to. In those instances it makes sense to think first about what is good about your existing state of affairs and then to consider alternative options.

Other times, we can assign people a new status quo, and this can be one of the entry points for decision architecture. How do we do that, and when should we do that? Those of you who set public policy often do it the hard way: you legislate away harmful or otherwise inferior choice options. So, yes, we cannot buy heroin on the open market, and, no, in Germany you can no longer buy the traditional incandescent light bulbs. We now all have to switch to CFL bulbs. Taken products or choice options off the market like that is not so popular in some parts of the world; it is seen as too paternalistic. But there are also softer ways of giving people a new status quo, by making a new option the “default,” i.e., the option that you will get unless you take an active decision against it, without taking other options off the market.

Let me show you by an example what I mean by decision default. In the case of organ donation, every country has implicit defaults. These defaults differ by country. Some countries, Germany and the United States, are “opt-in” countries. You are not a potential organ donor unless you declare that you want to be one; whereas other countries have an “opt-out” policy: you are a potential organ donor unless you actively declare otherwise.

What I want to argue is that the choice default that is in place strongly determines choices, and that it influences choices, as we have shown in our lab, by which choice option the potential donor considers first, in each case the assigned default option. In the opt-in case, people thus first consider reasons for not being a donor; in the opt- out case, in contrast, they first consider reasons for being a donor.

Does it make a difference? Yes. This question was studied in 2003 by Eric Johnson and Dan Goldstein. Let us just look at Germany and Austria, in the middle of the graph. In Germany (the right-most green bar), an opt-in country where you are not a potential donor unless you declare otherwise, 12 out of a hundred end up being potential donors. In Austria, an opt-out country where you are a donor unless you actively decide otherwise, though otherwise very similar to Germany in many ways, almost everyone is a potential donor. This is true not just for willingness to be a donor, but also for actual organ transplants. So, this difference in country-level defaults has huge social ramifications.

What happens when we don’t have an existing status quo behaviour and when we don’t have a prescribed default in place? Well, in such cases the labels by which choice options are described really matter, because labels can make one option more emotionally appealing. So, it turns out that people pay more for minced meat when it is labelled 75% lean than when the same meat is labelled 25% fat. Obviously, two descriptions that are just two flip sides of the coin, but one is more appealing. I also want to show you quickly a decision, an experiment, within our lab, conducted on the web. People had to choose between an airplane ticket that included a carbon fee – something that you can actually buy commercially on the web, there are companies that offer that – or the cheaper ticket without the fee. The only thing that varied in two or three pages of instructions that come right from these commercially available offset websites was label of the carbon fee. In one version we called it an offset, a carbon offset; in the other version we called it a carbon tax. As you can see on the slide, about 60% of our respondents – these were Americans – choose the inclusive option, i.e., the more expensive ticket that included the fee, when it the fee was labelled “carbon offset,” regardless of whether they were Democrats, Independents or Republicans. However, as soon as we called the same fee a “carbon tax” – and “tax” is a dirty word in the United States, you don’t want to have any taxes, especially if you are a Republican – the proportion of Republicans choosing the fee-inclusive option went down to 27%.

So let me wrap up by reflecting on what we have learned and how we can use that to facilitate change. Chancellor Merkel, last year at this conference, talked about old patterns of science and old patterns of politics – how they bog down our minds. Today we have learned why they bog down our minds, because our mind actually favours these old patterns. So, knowing what we know about our natural short- sightedness, and knowing what we now know about Query Theory, can we become our own decision architects? My husband and I recently decided to become vegetarians after we spent five days with the Dalai Lama in India, where we had great vegetarian food. So, we decided to change our default of what we eat to vegetarianism to reduce our carbon footprint. In addition to first considering vegetarian options, we also publically declared that we were becoming vegetarians – notice that I am doing it again here. We also gave away all the meat in our freezer. And we moved all the cookbooks for vegetarian dishes right next to the stove. In combinations these modifications in our food choice environment have a good chance of ensuring that we eat less meat down the road than we did before.

But change, at the individual level, is very, very hard. The story of Ulysses demonstrates that. Ulysses needed help. He asked his crew to tie him to the mast of his boat to resist the call of the Sirens. So, I want to end my presentation with a plea to the politicians and to the policymakers in this room. What I want to suggest is that you have both an opportunity and a responsibility to set wise defaults for us – the public. You have to help us to achieve our long-term goals. You can do this in relatively simple ways. You can make socially and individually beneficial and responsible options the default in situations like building codes or other infrastructure decisions that would involve energy and transportation. You will most likely encounter opposition to that, because as we know, the public does not like change – the human mind does not like change and reacts negatively to proposed change. But ongoing research in our lab shows that public opinion comes around after a few months or a year after you impose change that has benefits, because after a while the initial change is being perceived as a new status quo. It just takes some time for that to happen.

Chancellor Kohl and President Gorbachev showed this kind of political leadership when they helped to bring down the Berlin Wall. We continue to face challenges of that sort in the form of technological and social change in many other domains. I want to finish by thanking you for your attention and by leaving you with the assurance that “if you change it, they will like it,” -- eventually.

 

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